WTI/RBOB bounced today in anticipation of a reversal of the last two week's builds in crude inventories, and bulls were not disappointed by the API print. Jan '18 WTI pushed above $57 but RBOB fell after a big crude draw (though gasoline build).

“It looks like we are going to get a draw in crude oil inventories. That’s somewhat supportive,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by phone.

Investors are also “looking ahead to the OPEC meeting, and despite some of that dithering by Russia, the consensus is they are going to come together and extend the output cuts.”

Additionally, Oil Vol dropped to 8 month lows...

“When you get into a solid, one-way trend, the volatility tends to come down because there’s not really a sense of an impending doom to the downside or even a real explosive upside breakout,"

API

• Crude -6.356mm (-2.2mm exp) - biggest draw since August
• Cushing -1.8mm
• Gasoline +869k
• Distillates-1.67mm

Crude inventories up the last 2 weeks and a surprise gasoline build spooked markets but if API data holds this week's crude draw is the largest since August and the Cushing destocking is the largest since July. However, Gasoline saw another modest (surprise) build.

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WTI (Jan 18) had pushed up towards $57 ahead of the API print and extended those gains after the big crude draw... RBOB faded after a small initial gain...

(Click on image to enlarge)

As Bloomberg reports, while Russia is said to believe it’s too early to announce anything this month, Tass news service reported that Russian oil companies and the Energy Ministry discussed extending the deal with OPEC by six months after March. The Energy Ministry and oil companies continue to discuss different versions of OPEC’s deal development, RIA reported.

“The markets have widely anticipated that OPEC will provide additional guidance about extending the production cuts past the March deadline,” Mark Watkins, a Park City, Utah-based regional investment manager at U.S. Bank Wealth Management, which oversees $142 billion in assets, said by telephone. “But, OPEC has the ability to kick the can down the road and delay a commitment on the extension.”